New Tax Credit and Business 101
The Senate is pushing for a $15,000 tax credit for all homebuyers in lieu of the first time buyer credit currently in action. The new credit is planned to have no income restrictions.
Out of the blue, 2-3 weeks ago rates started going up. Infact they rose a full point in about a week. What was one day 5% or slightly better, became 6% or slightly worse. Will they come back down? Why did this happen?
Let's start with the former. This week rates have attempted to go lower and did so until today. Rates came back down into the low-mid 5's and then today on the news that the Treasury will auction of millions of bonds next week to raise capital, rates got worse. This takes us to the "Why?". This is now a simple case of business 101- supply and demand. All of these mortgage bonds and treasury bonds became to much supply, with not enough demand. To create demand rates have to go up so investors find the bonds more attractive. On top of this, the news is talking about several economic experts that have said the recession is ending soon and inflation will be on the rise. All of this = higher rates.
Tags: Concord ca, contra costa, loans, mortgages
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